Many investors consider tech to be a risky bet. After all, just look at the performance of the web darlings that recently held their IPOs. But among the tech companies in that list, how many not only have substantial revenue, but also large well-earned cash reserves stashed away in the bank? With this idea in mind, today we focused on large-cap tech companies with strong cash reserves in the ready, since it's cash that can pay for innovative R&D, strategic acquisitions, or other long-term investments. Having cash also lets a company adapt to changes in the market, which is a key trait for any company in the ever-changing tech space.
As a way to bring light to only the best tech companies with solid cash reserves, we zeroed in on companies that analysts have rated as 'Buy' or better, since it indicates that a company is doing a variety of things right by investors. In searching for stocks with these traits, we came up with a pretty interesting list of large-cap tech companies to watch.
The Current Ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now, this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick Ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for large cap technology stocks. Next, we screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). Then we screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3).
Do you think these large-cap stocks will perform well? Use our list along with your own analysis.
1) Check Point Software Technologies Ltd. (NASDAQ:CHKP)
|Industry:||Security Software & Services|
Check Point Software Technologies Ltd. has a Current Ratio of 4.18, a Quick Ratio of 4.18, and an Analysts' Rating of 2.00. The short interest was 1.64% as of August 14, 2012. Check Point Software Technologies Ltd. develops, markets, and supports a range of software, and combined hardware and software products and services for information technology (IT) security worldwide.
It offers network and gateway security solutions that enable its customers to implement their security policies on network traffic between internal networks and the Internet, as well as between internal networks and private networks that are shared with partners; endpoint security solutions, which provide various software blades that run on individual computers connected to the network, such as desktop computers, laptop computers, and other mobile devices; and security management solutions to ensure consistent operations in accordance with an enterprise's security policy.
The company also offers technical services comprising technical customer support programs and plans, such as enterprise based support and collaborative enterprise support; certification and educational training on the checkpoint's products; and professional services in implementing, upgrading, and optimizing checkpoint's products, including design planning, security implementation, and project management services.
2) Activision Blizzard, Inc. (NASDAQ:ATVI)
|Industry:||Multimedia & Graphics Software|
Activision Blizzard, Inc. has a Current Ratio of 2.92, a Quick Ratio of 2.83, and an Analysts' Rating of 1.80. The short interest was 3.20% as of August 14, 2012. Activision Blizzard, Inc. publishes online, personal computer (PC), console, handheld, and mobile interactive entertainment worldwide. It develops and publishes PC-based computer games and maintains its proprietary online-game related service, Battle.net.
3) Oracle Corporation (NYSE:ORCL)
Oracle Corporation has a Current Ratio of 2.60, a Quick Ratio of 2.59, and an Analysts' Rating of 2.00. The short interest was 0.98% as of August 14, 2012. Oracle Corporation, an enterprise software company, develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide.
It licenses of database and middleware software, including database management software, application server software, service-oriented architecture and business process management software, data integration software, business intelligence software, identity and access management software, content management software, portals and user interaction software, development tools, and Java; and applications software comprising enterprise resource planning, customer relationship management, enterprise performance management, supply chain management, business intelligence applications, enterprise portfolio project management, Web commerce, and industry-specific applications software. The company also offers customers with rights to unspecified software product upgrades and maintenance releases; Internet access to technical content; and Internet and telephone access to technical support personnel.
4) Cisco Systems, Inc. (NASDAQ:CSCO)
|Industry:||Networking & Communication Devices|
Cisco Systems, Inc. has a Current Ratio of 3.57, a Quick Ratio of 3.49, and an Analysts' Rating of 2.20. The short interest was 0.98% as of August 14, 2012. Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. It offers routers that interconnect public and private IP networks for mobile, data, voice, and video applications; switching products, which provide connectivity to end users, workstations, IP phones, access points, and servers; application networking services; and home networking products, such as adapters, gateways, modems, and home network management software.
The company also offers security products comprising span firewall, intrusion prevention, remote access, virtual private network, unified client, Web, and email security and network security products; storage area networking products for data center environments that deliver connectivity between servers and storage systems; collaboration products to integrate voice, video, data, and mobile applications on fixed and mobile networks; video connected home products, including digital video distribution systems and digital interactive set-top boxes; and wireless systems.
5) Qualcomm Incorporated (NASDAQ:QCOM)
Qualcomm Incorporated has a Current Ratio of 2.97, a Quick Ratio of 2.82, and an Analysts' Rating of 1.90. The short interest was 0.88% as of August 14, 2012. QUALCOMM Incorporated designs, develops, manufactures, and markets digital telecommunications products and services. It operates in four segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), Qualcomm Wireless and Internet (QWI), and Qualcomm Strategic Initiatives (QSI).
The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies for use in voice and data communications, networking, application processing, multimedia, and global positioning systems.
6) Cerner Corporation (NASDAQ:CERN)
|Industry:||Healthcare Information Services|
Cerner Corporation has a Current Ratio of 3.57, a Quick Ratio of 3.52, and an Analysts' Rating of 2.30. The short interest was 7.12% as of August 14, 2012. Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, and content solutions for healthcare organizations and consumers worldwide.
It offers the Cerner Millennium architecture, which combines clinical, financial, and management information systems that provides access to an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front and back-office professionals, and consumers. The company also provides the Healthe Intent platform, a cloud-based platform that sits above existing EHR systems and is designed to contain data from any EHR along with claims data, medical evidence, and research to facilitate proactive care.
7) Broadcom Corp. (BRCM)
|Industry:||Semiconductor - Integrated Circuits|
Broadcom Corp. has a Current Ratio of 2.53, a Quick Ratio of 2.13, and an Analysts' Rating of 2.00. The short interest was 1.39% as of August 14, 2012. Broadcom Corporation designs and develops semiconductor solutions for wired and wireless communications. It provides a portfolio of system-on-a-chip (SoC) and software solutions.
The company's products deliver voice, video, data, and multimedia connectivity in the home, office, and mobile environment. Its Broadband Communications segment offers cable modem SoCs; femtocell SoCs; MPEG/AVC/VC-1 encoders and transcoders; xDSL, xPON, and cable modem customer premises equipment and central office solutions; powerline networking SoCs; and digital cable, direct broadcast satellite, terrestrial, and Internet protocol set-top box SoCs.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.